WAMU, JP Morgan Chase, and the FDIC - Who
exactly is looking out for you?

While the markets were closed, and the
Chairman of Washington Mutual was on a flight from New York to
Seattle, the largest theft in US history took place. Although
there has been negative news about the financial stocks for the
past few months, including Washington Mutual,the FDIC and
Washington Mutual repeated assurances that the bank was in good
shape through 2010 over and over and the fact that WaMu met it's
daily requirements. If that is the case, the seizure and
immediate for profit sale of WAMU to JP Morgan Chase raises many
questions.

This isn't so much about the failure of WAMU, as that
may have happened eventually anyway, but suddenly the FDIC has
become a for profit institution taking over and selling off a
company for 1.9 Billion dollars. This is unprecedented in many
ways, and in many ways probably illegal. The shareholders
own WAMU, not the FDIC. Yes, the FDIC regulates banking, however
shareholders own the company. WAMU could have literally gone
bankrupt and sold off chairs, computers, land etc and
shareholders would have received some portion of compensation.
In this seizure, Chase gets the assets and deposits at a
bargain, the FDIC gets 1.9 Billion dollars and shareholders get
nothing. It is literally something you might think would happen
in Nazi Germany, not the United States.

It seems as if these failures are following a pattern that we
are seeing over and over. First, short sellers work to smear the
bank's reputation. Major media outlets join the fray. Analysts
downgrade. Ratings agencies follow with downgrades. Cost of
insurance skyrockets creating self-fulfilling prophecy. The Bank
forced to come up with reserve capital to please ratings
agencies. Dilution of shareholder equity at sale prices. Share
price falls further triggering more downgrades from
above-mentioned entities. The Media really starts to salivate
now and creates all kinds of instability with doom and gloom,
and seem outright gleeful about it. Then institutions and high
net worth individuals begin pulling deposits out of the targeted
bank. Further ratings agencies downgrades. The media then
creates a self fulfilling prophesy with constant reporting of
doom and gloom and individuals also pull their money out of the
targeted bank. Then the FDIC having all the ammunition it needs
steps in and seizes the bank assets and sells them to whoever
they are in bed with that week.

Basically the government decided that they liked JP Morgan
Chase so much as an institution that they would gift them this
company.

It's worse than that though, last week Goldman Sachs upgraded
WM to hold knowing all of this was going on. Serious
misrepresentation of the facts. The story told to the public was
that Goldman was supposed to be brokering a sale. This at the
expense of average Americans. Sure there are a lot of
institutions that owned shares in WAMU, but there are an
incredible amount of average Americans who had large portions of
their retirements tied up in WAMU stock. Without that upgrade,
many may not have kept the stock through this trouble. Some are
now threatening suicide. Families are breaking up. People have
lost everything. How can the American public not be safe
investing in an American Bank. A bank that owns assets, that had
a large deposit base and that stated it could sustain life until
2010.

That doesn't even begin to mention that by next week the
whole dynamics of WM could change for the better with the
government bailout coming. Stock could have increased in value
once the toxic paper was taken from WM. More liquidity would
have been available. The 2010 deadline would be extended to many
more years once the toxic paper was removed. This was not a bank
in trouble in any of the standards that have been repeated over
the last eighty years.

You really want to get upset about it, take a look at the
aftermarket trading volume. Before any of this was announced,
there were three very large trades in the early aftermarket, in
a three minute period totaling almost 13 million shares. The
FDIC and the markets allowed someone to get inside and make away
with some 12 million dollars.
nasdaq
screenshot There is no way that trading should not have
been suspended before this was allowed to happen, just another
case of corruption and manipulation by the government and large
institutions.

Possibly the most damaging could be what this could do to the
American psyche as a whole. The corruption in the system has
just killed the morale and spirit of many people. They have no
trust in Wall Street, the financial system, politics and the
future of America! Corruption, short selling, manipulation
of stock, and abusive ratings downgrades are all responsible for
bringing this company down to the point that this could happen,
and then a corrupt government agency cherry picked a bargain for
their buddies at JPMorgan who get a huge upside. The FDIC
facilitated a transaction that was so corrupt and damaging words
cannot properly describe it.

In the end, it is the system as a whole that will lose, as
the average American can no longer trust not only it's banking
industry, or Wall Street, but apparently it's government
anymore.

Source Articles

JP Morgan said in its Thursday evening
conference call that excluded from the
transaction are the senior unsecured debt,
subordinated debt, and preferred stock of
Washington Mutual's banks. JPMorgan Chase will
not be acquiring any assets or liabilities of
the banks' parent holding company or the holding
company's non-bank subsidiaries. As part of this
transaction, JPMorgan Chase will make a payment
of approximately $1.9 billion to the FDIC